Oil prices retreat as inventories swell

19 March 2009

Increasing US crude inventories prompted oil prices to retreat again on Wednesday, despite reaching nearly $50 (£35) a barrel the previous day.

US crude fell by more than one dollar to close at $48.14 a barrel, while London Brent crude settled down 58 cents at $47.66 a barrel.

The drops came on the back of a report by the US Energy Information Administration which showed that crude stockpiles rose to 353.3 million barrels last week - the highest level in almost two years.

Values had rallied earlier in the week as market spectators claimed that Opec's recent supply cuts were beginning to shore up prices and tighten supplies.

However, senior analyst at BNP Paribas Harry Tchilinguirian suggested that oil prices are unlikely to break out of the $40 to $50 range until the world economy begins to recover.

"We maintain that despite Opec supply cuts in the making, demand considerations will continue to shape the path of oil prices this quarter and next," he commented.

This could come as good news for many heating oil customers, who are likely to see the cost of the domestic fuel remain low unless crude oil prices rise in the coming months.

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